With project completions exceeding the value of contract awards a net loss has been recorded across the projects sector
The first half of this year was a period of recovery for the GCCs projects market, as the region rebounded from a disappointing six months at the end of last year.
With $62bn of contract awards the market had a steady start to 2013, a figure that is broadly in line with most other six-month periods over the past five years.
While this may be a relief to many, there is still good reason for caution. While the value of awards has remained largely constant since 2008, the value of work that is being completed has not. It has risen from $15.9bn in 2008 to $61bn in 2013.
With just $49bn of awards signed in the second half of last year and $61bn of project completions the market registered a net loss for the first time.
The market would have seen a decline in growth again for the first half of this year if Qatar had not awarded $8bn of work on its Doha Metro scheme. Completions totalled $61bn, meaning that overall there was a net gain of $978m across the six GCC states.
The rise in completions creates a new paradigm for policymakers and the companies that supply goods and services to the projects sector.
Gone are the days when government officials and business leaders could expect double-digit growth every year. Instead, governments must now either invest themselves or secure private-sector backing for projects to maintain their economies not grow them. The supply chain, meanwhile, will have to compete aggressively to maintain the workload that it currently enjoys, instead of bidding for fresh revenue lines.
As growth becomes harder to achieve, efficiency will become increasingly important for both governments and individual businesses. Those that are able to maximise the potential of the work on offer will undoubtedly succeed, those that fail to operate efficiently will ultimately fail.
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